The Benefits of Using Life Insurance to Maximize Your Charitable Giving
Sometimes there are tax advantages in giving some or all of highly appreciated stock, business interests, or other assets to charity. This is a common thought process for those charitably inclined: “How do I save on taxes, benefit my favorite charities, and keep from taking away from my family’s inheritance?” Life insurance can be a great addition to your plan.
How It Works
Upon death, life insurance policies pay out some or all of the death benefit directly to a charity without going through probate or estate tax. This makes life insurance one of the most powerful and efficient vehicles for charitable giving — you can leave a transformational gift to your favorite cause for far less than the gift itself is worth.
Tax-Free Charitable Giving
Replacing Assets Given to Charity
The strategy works like this: you donate appreciated assets (which avoids capital gains tax on the appreciation), and simultaneously purchase a life insurance policy to replace the value of those assets for your heirs. Done correctly, you can benefit your favorite charity, reduce your taxable estate, avoid capital gains tax, and still leave your heirs a meaningful inheritance.
A Win-Win-Win Strategy
This strategy works best when coordinated with a qualified estate planning attorney and financial advisor. But getting the life insurance component in place is something you can do in minutes — right here, right now.
